The theory of Ricardian equivalence predicts that:

A. Reductions in income taxes will increase aggregate demand because people will spend the majority of the extra income.

B. People will always spend the full amount of any tax rebate because they are not forward looking.

C. Reductions in income taxes will not increase aggregate demand because people will save the majority of the extra income.

D. Decreasing taxes is always more effective than increasing government spending in terms of the impact on aggregate demand.